Intrinsic value of Urban Outfitters, Inc. - URBN

Previous Close

$23.85

  Intrinsic Value

$30.22

stock screener

  Rating & Target

buy

+27%

Previous close

$23.85

 
Intrinsic value

$30.22

 
Up/down potential

+27%

 
Rating

buy

We calculate the intrinsic value of URBN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.00
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
  6.39
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
Revenue, $m
  3,941
  4,280
  4,633
  5,000
  5,381
  5,777
  6,189
  6,617
  7,062
  7,524
  8,005
  8,506
  9,027
  9,570
  10,137
  10,727
  11,343
  11,986
  12,657
  13,358
  14,091
  14,857
  15,658
  16,497
  17,374
  18,293
  19,255
  20,262
  21,318
  22,424
Variable operating expenses, $m
  3,567
  3,874
  4,193
  4,525
  4,870
  5,228
  5,601
  5,988
  6,391
  6,809
  7,245
  7,698
  8,170
  8,661
  9,174
  9,708
  10,265
  10,847
  11,454
  12,089
  12,752
  13,446
  14,171
  14,930
  15,724
  16,555
  17,426
  18,337
  19,293
  20,294
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,567
  3,874
  4,193
  4,525
  4,870
  5,228
  5,601
  5,988
  6,391
  6,809
  7,245
  7,698
  8,170
  8,661
  9,174
  9,708
  10,265
  10,847
  11,454
  12,089
  12,752
  13,446
  14,171
  14,930
  15,724
  16,555
  17,426
  18,337
  19,293
  20,294
Operating income, $m
  374
  407
  440
  475
  511
  549
  588
  629
  671
  715
  760
  808
  858
  909
  963
  1,019
  1,078
  1,139
  1,202
  1,269
  1,339
  1,411
  1,488
  1,567
  1,651
  1,738
  1,829
  1,925
  2,025
  2,130
EBITDA, $m
  516
  560
  606
  654
  704
  756
  810
  866
  924
  984
  1,047
  1,113
  1,181
  1,252
  1,326
  1,404
  1,484
  1,568
  1,656
  1,748
  1,844
  1,944
  2,049
  2,159
  2,273
  2,394
  2,519
  2,651
  2,789
  2,934
Interest expense (income), $m
  0
  0
  3
  6
  10
  13
  17
  21
  25
  29
  33
  38
  43
  48
  53
  58
  63
  69
  75
  81
  88
  95
  102
  109
  117
  125
  134
  143
  152
  162
  172
Earnings before tax, $m
  374
  404
  434
  465
  498
  532
  567
  604
  642
  681
  723
  765
  810
  857
  905
  956
  1,008
  1,064
  1,121
  1,181
  1,244
  1,310
  1,378
  1,450
  1,525
  1,604
  1,687
  1,773
  1,863
  1,958
Tax expense, $m
  101
  109
  117
  126
  134
  144
  153
  163
  173
  184
  195
  207
  219
  231
  244
  258
  272
  287
  303
  319
  336
  354
  372
  392
  412
  433
  455
  479
  503
  529
Net income, $m
  273
  295
  317
  340
  363
  388
  414
  441
  468
  497
  527
  559
  591
  625
  661
  698
  736
  776
  818
  862
  908
  956
  1,006
  1,059
  1,113
  1,171
  1,231
  1,294
  1,360
  1,429

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,034
  2,209
  2,391
  2,580
  2,777
  2,981
  3,193
  3,414
  3,644
  3,882
  4,131
  4,389
  4,658
  4,938
  5,230
  5,535
  5,853
  6,184
  6,531
  6,893
  7,271
  7,666
  8,080
  8,512
  8,965
  9,439
  9,935
  10,455
  11,000
  11,571
Adjusted assets (=assets-cash), $m
  2,034
  2,209
  2,391
  2,580
  2,777
  2,981
  3,193
  3,414
  3,644
  3,882
  4,131
  4,389
  4,658
  4,938
  5,230
  5,535
  5,853
  6,184
  6,531
  6,893
  7,271
  7,666
  8,080
  8,512
  8,965
  9,439
  9,935
  10,455
  11,000
  11,571
Revenue / Adjusted assets
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
  1.938
Average production assets, $m
  918
  997
  1,080
  1,165
  1,254
  1,346
  1,442
  1,542
  1,645
  1,753
  1,865
  1,982
  2,103
  2,230
  2,362
  2,499
  2,643
  2,793
  2,949
  3,112
  3,283
  3,462
  3,648
  3,844
  4,048
  4,262
  4,486
  4,721
  4,967
  5,225
Working capital, $m
  185
  201
  218
  235
  253
  272
  291
  311
  332
  354
  376
  400
  424
  450
  476
  504
  533
  563
  595
  628
  662
  698
  736
  775
  817
  860
  905
  952
  1,002
  1,054
Total debt, $m
  58
  119
  182
  249
  317
  389
  463
  540
  620
  703
  790
  880
  974
  1,072
  1,174
  1,280
  1,391
  1,507
  1,627
  1,754
  1,886
  2,024
  2,168
  2,319
  2,477
  2,642
  2,816
  2,997
  3,187
  3,386
Total liabilities, $m
  710
  771
  834
  900
  969
  1,040
  1,115
  1,192
  1,272
  1,355
  1,442
  1,532
  1,626
  1,723
  1,825
  1,932
  2,043
  2,158
  2,279
  2,406
  2,538
  2,675
  2,820
  2,971
  3,129
  3,294
  3,467
  3,649
  3,839
  4,038
Total equity, $m
  1,324
  1,438
  1,556
  1,680
  1,808
  1,941
  2,079
  2,223
  2,372
  2,527
  2,689
  2,857
  3,032
  3,215
  3,405
  3,603
  3,810
  4,026
  4,252
  4,487
  4,733
  4,991
  5,260
  5,542
  5,836
  6,145
  6,468
  6,806
  7,161
  7,533
Total liabilities and equity, $m
  2,034
  2,209
  2,390
  2,580
  2,777
  2,981
  3,194
  3,415
  3,644
  3,882
  4,131
  4,389
  4,658
  4,938
  5,230
  5,535
  5,853
  6,184
  6,531
  6,893
  7,271
  7,666
  8,080
  8,513
  8,965
  9,439
  9,935
  10,455
  11,000
  11,571
Debt-to-equity ratio
  0.040
  0.080
  0.120
  0.150
  0.180
  0.200
  0.220
  0.240
  0.260
  0.280
  0.290
  0.310
  0.320
  0.330
  0.340
  0.360
  0.370
  0.370
  0.380
  0.390
  0.400
  0.410
  0.410
  0.420
  0.420
  0.430
  0.440
  0.440
  0.450
  0.450
Adjusted equity ratio
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651
  0.651

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  273
  295
  317
  340
  363
  388
  414
  441
  468
  497
  527
  559
  591
  625
  661
  698
  736
  776
  818
  862
  908
  956
  1,006
  1,059
  1,113
  1,171
  1,231
  1,294
  1,360
  1,429
Depreciation, amort., depletion, $m
  141
  153
  166
  179
  193
  207
  222
  237
  253
  270
  287
  305
  324
  343
  363
  385
  407
  430
  454
  479
  505
  533
  561
  591
  623
  656
  690
  726
  764
  804
Funds from operations, $m
  415
  448
  483
  519
  556
  595
  636
  678
  722
  767
  814
  864
  915
  968
  1,024
  1,082
  1,143
  1,206
  1,272
  1,341
  1,413
  1,489
  1,567
  1,650
  1,736
  1,827
  1,921
  2,021
  2,124
  2,233
Change in working capital, $m
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  38
  39
  41
  43
  45
  47
  50
  52
Cash from operations, $m
  399
  432
  466
  502
  538
  577
  616
  658
  701
  745
  792
  840
  890
  943
  997
  1,054
  1,114
  1,176
  1,241
  1,308
  1,379
  1,453
  1,530
  1,611
  1,695
  1,784
  1,876
  1,973
  2,075
  2,181
Maintenance CAPEX, $m
  -129
  -141
  -153
  -166
  -179
  -193
  -207
  -222
  -237
  -253
  -270
  -287
  -305
  -324
  -343
  -363
  -385
  -407
  -430
  -454
  -479
  -505
  -533
  -561
  -591
  -623
  -656
  -690
  -726
  -764
New CAPEX, $m
  -78
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -104
  -108
  -112
  -117
  -121
  -127
  -132
  -138
  -143
  -150
  -156
  -163
  -171
  -179
  -187
  -195
  -204
  -214
  -224
  -235
  -246
  -258
Cash from investing activities, $m
  -207
  -220
  -235
  -251
  -268
  -285
  -303
  -322
  -341
  -361
  -382
  -404
  -426
  -451
  -475
  -501
  -528
  -557
  -586
  -617
  -650
  -684
  -720
  -756
  -795
  -837
  -880
  -925
  -972
  -1,022
Free cash flow, $m
  192
  212
  231
  250
  270
  291
  313
  336
  360
  384
  410
  436
  464
  493
  523
  554
  586
  619
  654
  691
  729
  769
  810
  854
  899
  947
  996
  1,048
  1,103
  1,159
Issuance/(repayment) of debt, $m
  58
  61
  64
  66
  69
  71
  74
  77
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  151
  158
  165
  173
  181
  190
  199
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  58
  61
  64
  66
  69
  71
  74
  77
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  151
  158
  165
  173
  181
  190
  199
Total cash flow (excl. dividends), $m
  250
  273
  294
  316
  339
  363
  388
  413
  440
  468
  497
  527
  558
  591
  624
  660
  697
  735
  775
  817
  861
  907
  955
  1,005
  1,057
  1,112
  1,170
  1,230
  1,293
  1,359
Retained Cash Flow (-), $m
  -110
  -114
  -118
  -123
  -128
  -133
  -138
  -144
  -149
  -155
  -162
  -168
  -175
  -182
  -190
  -198
  -207
  -216
  -225
  -236
  -246
  -257
  -269
  -282
  -295
  -309
  -323
  -338
  -355
  -372
Prev. year cash balance distribution, $m
  87
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  227
  159
  176
  193
  211
  230
  249
  270
  291
  312
  335
  358
  383
  408
  434
  462
  490
  519
  550
  582
  615
  650
  686
  723
  763
  804
  846
  891
  938
  987
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  218
  146
  153
  159
  163
  167
  168
  168
  167
  164
  159
  153
  146
  137
  128
  117
  107
  96
  85
  74
  64
  54
  45
  37
  30
  23
  18
  14
  10
  7
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Urban Outfitters, Inc. is a lifestyle specialty retail company. The Company operates through two segments: Retail and Wholesale. The Company's Retail segment consists of its Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn brands, whose merchandise is sold to its customers through retail stores, Websites, mobile applications, catalogs and customer contact centers. The Retail segment also includes Vetri Family, which operates restaurants under the names Amis, Alla Spina, Lo Spiedo, Pizzeria Vetri and Osteria. Its Wholesale segment consists of the Free People wholesale division that primarily designs, develops and markets young women's contemporary casual apparel and shoes through individual and chain specialty stores and department stores. The Company's Wholesale segment includes Free People-branded tops, bottoms, sweaters, dresses, intimates, shoes and activewear, which are sold through department and specialty stores around the world, and its Free People stores.

FINANCIAL RATIOS  of  Urban Outfitters, Inc. (URBN)

Valuation Ratios
P/E Ratio 12.7
Price to Sales 0.8
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 6.7
Price to Free Cash Flow 10.2
Growth Rates
Sales Growth Rate 2.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 6.7%
Cap. Spend. - 3 Yr. Gr. Rate -5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.7%
Ret/ On Assets - 3 Yr. Avg. 11.7%
Return On Total Capital 16.8%
Ret/ On T. Cap. - 3 Yr. Avg. 16.4%
Return On Equity 17.8%
Return On Equity - 3 Yr. Avg. 17.1%
Asset Turnover 1.9
Profitability Ratios
Gross Margin 35.1%
Gross Margin - 3 Yr. Avg. 35.1%
EBITDA Margin 13.3%
EBITDA Margin - 3 Yr. Avg. 14.2%
Operating Margin 9.6%
Oper. Margin - 3 Yr. Avg. 10.3%
Pre-Tax Margin 9.5%
Pre-Tax Margin - 3 Yr. Avg. 10.2%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 6.5%
Effective Tax Rate 35.5%
Eff/ Tax Rate - 3 Yr. Avg. 35.9%
Payout Ratio 0%

URBN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the URBN stock intrinsic value calculation we used $3616 million for the last fiscal year's total revenue generated by Urban Outfitters, Inc.. The default revenue input number comes from 0001 income statement of Urban Outfitters, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our URBN stock valuation model: a) initial revenue growth rate of 9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for URBN is calculated based on our internal credit rating of Urban Outfitters, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Urban Outfitters, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of URBN stock the variable cost ratio is equal to 90.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for URBN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Urban Outfitters, Inc..

Corporate tax rate of 27% is the nominal tax rate for Urban Outfitters, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the URBN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for URBN are equal to 23.3%.

Life of production assets of 6.5 years is the average useful life of capital assets used in Urban Outfitters, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for URBN is equal to 4.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1300.903 million for Urban Outfitters, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 105.557 million for Urban Outfitters, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Urban Outfitters, Inc. at the current share price and the inputted number of shares is $2.5 billion.

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